What stands in the way of hundreds of thousands in Michigan getting health insurance? The state Legislature.

For most of her adult life, Mari has lived the ultimate gamble: getting through without health insurance.

She has always had a job but made too
much money to qualify for Medicaid, which caps income for single adult
recipients at 35 percent of the federal poverty level, or about $3,900
in 2012. Her employers did not offer a health benefit. With an annual
income of less than $22,000, buying insurance on her own was simply out
of the question.

Mari is more fortunate than many
low-income individuals and families in Michigan. Thanks to the Ingham
Health Plan, which helps up to 200 percent of poverty, she had access to
office visits and some prescription assistance.

But she knew she was just one serious illness away from bankruptcy.

“I’ve been very grateful that I’ve
maintained my health and haven’t add any major emergencies. Not having
hospitalization, coverage for cancer or coverage for surgery, is scary,”
she said.

Mari is one of an estimated 35,000 people
in Ingham County who don’t qualify for Medicaid and are uninsured —
about 14 percent of the population.

Beginning next January, Mari and
thousands more will qualify either for Medicaid or heavily subsidized
private health insurance — but only if the state Legislature allows it.
And that’s far from a sure thing.

“It means a lot of peace of mind for me,” she said.

That peace of mind comes from the
Affordable Healthcare Act — generally called “Obamacare.” To understand
the impact of the law requires remembering two key numbers: 138 and 400.

If the state approves Medicaid expansion
as proposed by Gov. Rick Snyder, individuals and families with incomes
up to 138 percent of poverty would be eligible, which includes coverage
for hospitalization, mental health services, office visits and emergency
room treatment. Statewide, the Kaiser Family Foundation estimates
345,000 Michigan residents would be added to the Medicaid rolls,
although “a lot of this is educated guesswork,” says Don Hazaert,
director of Michigan Consumers for Healthcare.

“But there’s no question most of
Michigan’s 1.2 million uninsured will have coverage, either through
Medicaid or subsidized private insurance purchased through the state
exchange,” Hazaert said.

Between 138 percent and 400 percent of
poverty, significant federal tax credits will be available towards the
purchase of private insurance through the “insurance exchange,” a
Travelocity-style website that will give consumers multiple options for
coverage. The law requires most people above 138 percent of poverty to
purchase insurance or face tax penalties.

In addition, small businesses will be
encouraged to maintain or add health benefits through additional federal
tax subsidies. Businesses with 50 or more full-time employees will be
required to provide insurance, or face increasing financial penalties.

The combination of the exchange and
mandated benefits for many employees, Kaiser estimates, will result in
coverage for an additional 415,000.

That’s a total of about 760,000 fewer
uninsured in Michigan, leaving 440,000 still without insurance. In
Ingham County, fewer than 10,000 Ingham County residents would remain
uninsured.

Added to the mix will be greater access
to physicians for Medicaid patients. Obamacare doubles the compensation
paid to medical professionals for Medicaid patients. In Michigan,
providers are offered about half of the Medicare reimbursement rate for
Medicaid. As a result, many doctors will not accept Medicaid patients
because they lose money on every one of them.

The increased compensation “takes away
the financial incentive for physicians to discriminate against patients
who have Medicaid,” said Hazaert. “The expectation is that you are going
to see more physicians accepting Medicaid once they realize they are
going to be paid the same.”

That should provide some relief for
Ingham County’s two major charitable medical organizations, Care Free
Medical & Dental and Cristo Rey Community Center.

“We are their family physician. But even
with all the volunteer help we get and our much lower administrative
overhead, Care Free loses money on Medicaid patients, money that has to
be made up through donations.”

Who won’t be coveredSome county residents will still be left
out of the health care system and will still have to rely on Care Free
and Cristo Rey — or do without healthcare.

“We estimate that just under
9,000-to-10,000 people will continue to be uninsured,” said Robin
Reynolds, executive director of the Ingham Health Plan. “Part of the
challenge is getting the word out to people who could qualify but don’t
know it. Community outreach will be a high priority for us.”

Reynolds also expects some lower-income working families and individuals to fall between the cracks.

“These will be the people who are at
around 250 percent of the poverty level, high-needs people who have
unusually high spending for copays and deductibles: large families, and
the chronically ill,” said Reynolds.

Some others — mostly childless
individuals and couples in their 30s — will simply choose to pay a tax
penalty rather than buy insurance through the exchange. In 2014, the
“personal responsibility penalty” is only $95 for an adult and $47.50
for children, but it ratchets up to $2,085 or 2 percent of gross income
(whichever is greater) by 2016.

The two other large groups that will not
be covered are prisoners and undocumented workers, as well as
non-citizens who have been in the country fewer than five years, Native
Americans and members of certain religions (most notably Christian
Scientists).

The PoliticsThere’s one big “if” attached to all of
this: if the Legislature approves Snyder’s recommendation that Michigan
opt into the expansion of Medicaid. While upholding the rest of
Obamacare, the U.S. Supreme Court struck down portions that effectively
required states to participate, leaving the decision on participation up
to each state Legislature. A dozen states with Republican legislatures
have already decided against expanding Medicaid, choosing to leave
hundreds-of-thousands without medical coverage rather than accept the
federally funded expansion.

Working in favor of Snyder’s
recommendation: The federal government will provide 100 percent of the
coverage for new Medicaid enrollees through 2016 and 90 percent after
that. The federal government would also pick up costs for some state
health services, including community mental health services.

The Center for Healthcare Research and
Transformation at the University of Michigan estimates total state
budget savings of $983 million over the next decade as a result. (Snyder
has built $400 million of the savings into next year’s budget. If the
Legislature balks at expanding Medicaid, there will be a huge hole in
the governor’s budget that will have to be plugged.) Consumers for
Healthcare estimates the infusion of federal money will create 18,000
new jobs in the state.

Obamacare is anathema to the Tea Party,
which calls it a “government takeover” and “socialized medicine.”
Republicans like Snyder (along with his peers in Ohio, Pennsylvania, New
Jersey, Arizona and Florida) are considered political traitors by the
true believers. That view is reflected by many in the
Republican-controlled Michigan Legislature.

The bigger legislative challenge for Snyder is the state House of Representatives, where Speaker Jase Bolger calls himself “appropriately
skeptical.” In the Senate, Appropriations Committee Chairman Roger Kahn
(himself a physician) is supporting the expansion. In a Detroit News
op-ed, Kahn concluded “expanding Medicaid will save lives, save money
and lead to a healthier population.”

Beyond ideology, legislative opponents raise what they see as practical concerns:

You can’t trust the Feds to continue 90
percent funding. (Given the record of the Legislature in slashing
revenue sharing to local government, you can understand the mindset.)

With 750,000 more people in the
healthcare system, we won't have the resources to serve everyone. A
survey cited by Snyder, conducted through the University of Michigan,
indicates this won’t be a challenge.

Even if you believe the feds, beginning
in 2016 the state will have to come up with 10 percent of the cost, and
that’s too high a price to pay.

The business community is divided. The
Small Business Association of Michigan and Michigan Business and
Professional Association are strongly behind Snyder on the issue. SBAM’s
executive director, Rob Fowler, notes that business owners pay the cost
of non-paying emergency room patients through higher insurance
premiums, and Obamacare will sharply reduce those costs.

“It’s called cost shifting, and it’s been happening for a very long time,” Fowler said.

Cost shifting, Fowler notes, raises the
price of health insurance by about $1,500 per family. The Kaiser Family
Foundation estimates the law, if fully implemented in all states, would
reduce uncompensated care by $351 billion over the next decade.

“It’s found its way into the base rates of health insurance for small businesses all across the state,” says Fowler.

“I would say it’s a terrible business
model, that we take a growing burden of people who come without
compensation and we shift it to a shrinking group of people (small
business owners) who struggle to pay for health insurance. We support
(expansion of Medicaid) because we believe it ultimately can reduce the
sort of piling on effect that’s been happening to paying customers for
many years.”

Jennifer Kluge, CEO of the Michigan
Business and Professional Association, told Crain’s Detroit Business
“expanding healthcare is good for business, the state economy and its
citizens.”

Two major voices have yet to weigh in.
The very conservative Michigan State Chamber of Commerce and more
centrist Business Leaders for Michigan both have taken no position on Snyder’s proposal.

A poll of Michigan members of the National Federation of Independent Business Owners ran two-to-one against expanding Medicaid.

Another political consideration is the
deregulation of Michigan Blue Cross Blue Shield, which controls more
than 70 percent of the Michigan health insurance market. Haezert said
that legislation will result in higher premiums that will be blamed on
Obamacare.

“What you are seeing in states with
meaningful rate review is increases in the 4.5 percent range,” he said.
“States that aren’t doing any meaningful review are seeing 20
percent-plus annual increases. That’s where Michigan is going with this
change.” Those rate increases would be used as ammunition by
conservatives to back out of the federal expansion.

BCBSM’s 70 percent market share, he says,
effectively allows one company to set the price of insurance for all of
Michigan. It is comparable to how Speedway sets the market price for
gasoline: when Speedway changes prices, everyone else changes within a
matter of hours or even minutes. The same, he fears, will be the case
with health insurance.

The ImpactHow affordable health care impacts you
depends on your personal circumstances. Here’s what it would mean to 1)
patients now served by the Ingham Health Plan; 2) families between 138
percent and 400 percent of poverty; 3) people who already have
insurance; and 4) seniors.

Ingham Health PlanThe Ingham Health Plan provides office
visits (including some referrals to specialists) and some prescription
coverage. Moving IHP patients to Medicaid adds more inclusive coverage:
dental, family planning, hearing and speech, home healthcare, hospice,
hospitalization, surgery, vision, medical equipment, prosthetics and
physical therapy — none of which is available through IHP. While IHP
loses its state funding as a result of Obamacare, the significantly
reduced need for the program will allow it to transform itself.

“Our budget would go from $13 million to
$3.4 million, completely funded through last year’s millage,” said
Reynolds. “We are looking at transforming ourselves from a benefit
program to a subsidy program for those families that can’t afford even
the subsidized insurance through the Exchange.”

Tax Credits Families Who Qualify for Insurance PremiumFamilies with incomes between 138 percent
and 400 percent of poverty get an insurance tax credit based on the
cost of insurance compared with a percentage of their income. At 138
percent of poverty, any premium exceeding 2 percent of family income is
rebated. The percentage ratchets up to 9.5 percent for families at 400
percent of poverty ($92,200 for a family of four) and goes away for
higher incomes.

The median Michigan family income is
$46,000, or 200 percent of poverty for a family of four. At that level
the family receives a rebate of premiums exceeding 6.3 percent of income
($2,898). For that family, the premium subsidy would likely exceed
$10,000. (Rebates are based on what’s called a “silver” plan in the
array of plans that will be offered on the exchange. Additional costs
for a more inclusive “gold” plan do not qualify for rebates.) Families
with incomes up to 250 percent of poverty will also qualify for help in
paying out-of-pocket costs for co-pays and deductibles not covered by
insurance.

Impact on Those Who Already Have Insurance“We expect a fairly seamless transition,” said Consumers for Healthcare’s Hazert.

“What people are going to notice is that
their health plans will cover more preventative services without a
co-pay. It will cost a little bit more initially to cover the expanded
benefits, maybe 1 to 2 percent. In the long run there will be a huge
societal savings from transitioning to a preventative care model.”

Families with coverage are able to keep
children on their policies up to age 26. With most young people entering
the workforce in jobs that don’t include a healthcare benefit, this
change has already reduced the numbers of uninsured by thousands.
Insurers must now provide coverage for pre-existing conditions.

Some smaller businesses (with 50 to100
employees) may opt to pay federal penalties and drop health coverage for
employees, or adjust employment so that more workers are classified
part time and the business drops below the 50 full-time employee
threshold for mandatory coverage. Some consider this especially likely
for low-wage businesses such as fast food and convenience stores.

Hazaert is optimistic this won’t happen on a large scale. His organization is working directly with small businesses.

“Unfortunately it got politicized and that created misinformation and anxiety,” he said.

“There’s a good feeling in the small
business community once you explain to them how it works. Small
businesses are eligible for large tax credits. And there’s no reason for
any business to reduce payroll because of ACA, although it likely will
be used as a cover for some layoffs.”

SeniorsSeniors on Medicare are among the big
winners in healthcare reform. The law closes the “donut hole” in the
Medicare Part D prescription drug benefit. It expands options for
home-based healthcare. Co-pays are eliminated for Medicare-covered
preventative services, including colorectal screening tests.

What it meansA lot of this depends on affirmative
action by the Legislature. Without it, families with incomes between 138
percent and 400 percent of poverty will still be eligible for federal
insurance premium subsidies through the exchange.

Poorer people who don’t already qualify
for Medicaid (about 315,000) but are under 138 percent of poverty will
still be able to buy insurance through the Exchange, but will not be
eligible for federal premium subsidies. In effect, they will still be
shut out and continue to either use emergency rooms, or do without
medical care. They will pay a high price for legislative inaction and,
ironically, so will everyone who pays for medical insurance because we
subsidize that uncompensated care.

It would mean the Legislature is turning
down the federal cash infusion for such state programs as community
mental health, leaving the governor’s budget with a $400-million hole
(about 5 percent of the total general fund budget). If history is any
indication, that money would be made up in cuts to revenue sharing and
higher education.

The challenge for the Legislature: Will
conservative ideology take precedence over practicality — and over the
healthcare needs of 350,000 Michigan citizens?